Friday, August 13, 2010

Soak the very, very rich

James Surowiecki /New Yorker:

""The fight on Capitol Hill over whether to extend the Bush tax cuts is about many things: deficit reduction, economic stimulus, supply-side ideology. But at its core is a simple question: who counts as rich? The Obama Administration’s answer is that you’re rich if you make more than two hundred thousand dollars a year as an individual or two hundred and fifty thousand dollars a year as a household, and therefore you should have your taxes raised. Conservatives suggest that this threshold is far too low, and argue that Obama would be taxing mostly small-business owners, or the people a Fox News host has referred to as “the so-called rich,” rather than fat plutocrats. You might think this isn’t really much of a debate. An annual income of two hundred and fifty thousand dollars puts you in the top three per cent of American households, and is more than four times the national median. You’re rich, and a small tax increase isn’t going to rock your world."""
 Tea party types who insist they're being taxed to death don't know f**k about the economic history of the last 50 years (then, teabaggers are the sort of humanoids who consider basura such as Aynnie Rand or RA Heinlein great intellectuals):  marginal income tax and capital gains tax rates under the Nixon regime were 60%; about 80% under Eisenhower. 

Good luck convincing people of this, though. Judging from surveys of how Americans describe themselves, most of the privileged don’t feel all that privileged. Why is that? One reason is the American mythology of middle-classness. Another is geography: in a place like Manhattan, where the average apartment sells for nine hundred thousand dollars, your money doesn’t go as far. And then there’s a larger truth about how wealth is getting concentrated in this country. As the economists Thomas Piketty and Emmanuel Saez have documented, people who earn a few hundred thousand dollars a year have done much worse than people at the very top of the ladder.

Between 2002 and 2007, for instance, the bottom ninety-nine per cent of incomes grew 1.3 per cent a year in real terms—while the incomes of the top one per cent grew ten per cent a year. That one per cent accounted for two-thirds of all income growth in those years. People in the ninety-fifth to the ninety-ninth percentiles of income have represented a fairly constant share of the national income for twenty-five years now. But in that period the top one per cent has seen its share of national income double; in 2007, it captured twenty-three per cent of the nation’s total income. Even within the top one per cent, income is getting more concentrated: the top 0.1 per cent of earners have seen their share of national income triple over the same period. All by themselves, they now earn as much as the bottom hundred and twenty million people. So at the same time that the rich have been pulling away from the middle class, the very rich have been pulling away from the pretty rich, and the very, very rich have been pulling away from the very rich.


Jazzbumpa said...

The growing disparity at all levels
is something I have commented on repeatedly. I wouldn't say the people who earn a few hundred thousand dollars a year have done much worse than anyone. Those above have simply done far, far better.

And were talking an increase of 3%. BFD. Really. Way too little, and way too few brackets.

Conservatives of all stripes are in deep, deep denial on this issue. I'm firmly convinced they are just fine being serfs to the new trans-national corporations.


J said...


Agreed--the anti-tax hysteria has no basis in reason or history but serves mainly as type of rebel call.

Many Demos however don't quite realize that the economic thinking of many in the B.O. Admin. (like that of the econo-men from G-Sachs and the Clinton era, such as Summers) differs only slightly from that of the GOP/Tea party anti-tax zombies. Summers for instance was the point man for the de-reg policies of late 90s--which was bipartisan, all the way, and supported by the JPMorgans and G-sachs, AIG.

Again I would not go so far as to suggest the authentic Demos are quite the greedheads and supply-siders (or hawks) the GOP are, but's just a matter of degrees, and Billy Bob Clinton himself didn't do much in terms of revoking Reagan era policies).

Grazi for post.


J said...

Also, scuzi for moderation delay. GoogleCo just modified their spam control, so appears everything is moderated (tho' Contingencies does have enemies, mainly of the mormonic-ghoulish sort)

CharleyCarp said...

It's too bad that Washington is so broken that this can't work as a wedge issue. Those over 200k can fight being returned to the hell that was 1998 -- remember how innovation and investment were stifled by the socialistic rates of taxation back then, and how the deficit was mounting -- and in any reasonable world, the mass of people would just laugh at them.

J said...

Hello Mr Carp

Yes..though I think it was the big tax-slash at the end of Reagan's term (like '86 or so) which removed the older brackets, which did keep income tax and capital gains taxes high on the very wealthy (Reagan's first term taxes were proportionally higher on wealthy than they are now, according to official stats).

Clinton might have raised them slightly but left the Reagan upper bracket intact--a complete windfall for yacht club demopublicans and corporate America.

Then Bush cut them again in 2002 or so --Cal's own Dame Feinstein agreed to it--another boomtown especially for capital gains (ie stocks, bonds,futures, etc--where DiFi's cronies make their money the old fashioned way, via speculation).

Obama the supposed liberal has barely adjusted the BushCo slashes for the uber-wealthy--maybe because econo-men led by the likes of Summers and G-sachs execs are still raking it in.

Curtis Faville said...

Another interesting footnote to this:

Compare the percentage share of corporate taxes of the total revenue burden, decade by decade, since 1960.

Big business's "obligation" has been steadily declining as an absolute share. And our tax system is ridiculously out of date. Lower middle-class families now pay taxes at a rate comparable to what doctors and lawyers paid in 1960, when $15,000 was a lot of money.

Today, the rich make out like bandits. Statistics show that the more you make, the more effective your means of dodging taxes. And there are the offshore accounts, too. If you make a million a year, the wisdom goes, there's no reason you have to pay a dime of taxes. But if you make $125,000 as a single person, you'll probably pay over $35,000 in taxes (just for starters). And the so-called "inflation" index (like the unemployment index) is a fiction. People trying to exist on $30,000 a year today live in clearly definable poverty.

The so-called American middle class has been losing ground steadily for 40 years. It now takes 2.5 full-time wage earners to make the money a single, moderately successful breadwinner could earn in 1955. This is progress?

Who can afford a $45,000 car? In 1960, middle-class families could buy a car every other year, and, aside from its obvious inefficiencies, it was superior in nearly every respect to what that inflated figure above will buy today. It had a real steel frame, real bumpers, and enough hood and trunk to cushion against 90% of serious collisions. And don't talk to me about electric cars. Electric cars actually cost more in terms of carbon emissions than a reasonably efficient small sedan with a gasoline engine.

J said...

Hello Sir Faville.

I agree. Some tycoon--Buffett or someone was saying much the same a few months ago. As a percentage of income, Buffett pays less in taxes than the middle class, via shelters, investments, charity write-offs etc.

Thus the entire premise of the so-called "Tea party" is mistaken, at least historically speaking. Wealthy Americans paid more taxes--income, capital gains, and property-- under the Nixon regime, and the first term of Reagan-- than they do now. We might understand middle class people wanting tax cuts, less Fed spending, etc but it's complete BS that taxes are higher now. And most Fed taxes go to DoD anyway.

Pro-economist I am not but I am fairly convinced the very rich keep getting richer mainly because of the cuts on capital gains rates, and inheritance taxes (recall Bushco's slash of inheritance taxes in 2002 or so, via Billy Thomas, one of Kern county's backroom guys)--.

Capital gains --speculation, mainly--that's where the Deeep Pockets earn their money the old fashioned way. A big move in oil or gold futures, or bonds, or blue chip stocks--and they will double or triple their investment in a few months. (Of course it's just coincidence that Bush's best pals work for Exxon, Enron, Chevron, Occi, Halliburton etc....and the bull market in oil over last 10 years coincided with...war. It's nearly to have one reaching for the cliffsnotes to Kropotkin)

Cuts in property tax also benefitted the oligarchies--prop. 13, which many libertarian types consider gospel was a windfall for the wealthy of Cal., at least (tho' those monies go to counties and cities, not state or Fed. And many programs had to be eliminiated due to lack of funds coming in from prop. tax).

The proposal from the New Yorker appears eminently sound and reasonable--but the spineless crats are not likely to move on it. Let's not forget they're a corporate party as well. Perhaps not as greedy as GOP, but much of the de-reg of 90s at least was bipartisan. Clinton himself signed off on the removal of the last few items of the New Deal.

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